An impressive bounce back
North American markets shrugged off poor economic data and weak corporate earnings to claw back some of their losses earlier in the week. Dow gained an impressive 533 points to close at 8835. Broader market indexes also gained as S&P 500 and NASDAQ added 59 points (6.5 percent) and 97 points (5.9 percent) to close at 911 and 1,597 respectively. Optimism was evident in Toronto as well and TSX surged 430 points or 5 percent to 9 353. TSX venture however dropped marginally 8.91 to 814. Having fallen a record 2.77 yesterday the Canadian dollar was up 1.73 cents against the US dollar and closed at 82.54 cents.
Markets opened weak however as the Labour Department said the number of newly laid-off individuals seeking unemployment benefits jumped last week to a seven year high to reach 516,000. This is a level seen in 2001 after terrorist attacks and was above analysts’ expectation of 484,000. In addition, a sharp decline in consumer spending as indicated by Wal-Mart (NYSE: WMT) and Intel (NASDAQ: INTC) caused some selling. Intel cut its full year revenue forecast by $1 billion.
Wal-Mart reduced its full-year earnings outlook but posted a 10 percent growth in 3Q earnings. According to analysts, Wal-Mart is gaining market share from other retailers and is also benefiting from its early Christmas promotions. Wal-Mart shares gained $2.31 or 4 percent, to close at $54.93. Benefiting from a 3.9 percent sales growth, Toronto listed Loblaw Cos. Ltd. (TSX: L) also reported impressive results with a 32.5 percent rise in 3Q earnings to $155 million. Loblaw shares were up $1.66, to $28.60. Euphoria did not spill over to severely beaten General Motors (NYSE: GM) as it dropped a further 4.2 percent, to $2.95. Ford (NYSE: F) however gained 6 cents, or 3.3 percent, to $1.90.
Energy
In the face of rallying markets, oil also gained in the New York Mercantile Exchange and soared $2.08 to $58.24. Chevron Corp. (NYSE: CVX) was the biggest winner in Dow as the stock jumped 12.5 percent to close $75.71 Exxon Mobil Corp. (NYSE: XOM) also surged $6.48 or 9.4 percent to close at $75.41. ConocoPhillips (NYSE: COP) and Marathon Oil (NYSE: MRO) also gained 10.4 percent and 15.6 percent to close at $49.18 and $27.90 respectively.
The energy sector gained 7 percent in Toronto as all oil companies rallied. EnCana Corp. (TSX: ECA) gained 8.74 percent to $58.11 while Suncor Energy Inc. (TSX: SU) gained 3.46 percent to $24.19. Petro-Canada (TSX: PCA) and Canadian Natural Resources (TSX: CNQ) also added $1.90 and $2.39 to close $26.00 and $50.34 respectively. Canadian Oil Sands Trust (TSX: COS.UN) added 11.9 percent to close at $27.14.
Metals
Gold fell $13.30 to close at US$705.00 an ounce on the New York Mercantile Exchange. This had no impact on gold stocks however. Goldcorp Inc. (TSX: G) soared $4.04 or 17 percent to $27.99 while Barrick Gold Corp. (TSX: ABX) added $2.95 or 11.5 percent to reach $28.55. Kinross Gold (TSX: K) gained a whopping 19 percent to $16.90. In New York, Newmont Mining (NYSE: NEM) also rose $1.86 or 7.6 per cent to close at $26.18. AngloGold Ashanti (NYSE: AU) and Goldfields (NYSE: GFI) also rallied 10 percent and 9.6 percent respectively.
Having fallen sharply over the last two days, Teck Cominco Ltd. (NYSE: TCK) bounced back to close $0.54 or 10 percent higher to close at $5.82. Meanwhile Nortel Networks (NYSE: NT, TSX: NT) also jumped 32 percent to close at $0.78.
At the time of writing, gains have spilled over to Asian markets as well.
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